BUENOS AIRES (Reuters) - Pan American Energy has discovered
an oil reserve in southern Argentina in one of the biggest such
finds of recent years in the energy-hungry country, a
provincial governor said on Saturday.

Buenos Aires-based Pan American, which is controlled by BP
Plc <BP.L>, is Argentina's second-biggest oil producer and it
found the new reserve in the Patagonian province of Chubut.

"An oil reserve has been discovered in the Escalante basin
that's twice as big as what Chubut has produced to date," said
Chubut Gov. Mario Das Neves in a statement posted on the
provincial government Web site www.chubut.gov.ar.

"By 2007, all the companies produced 60 million barrels,
and this reserve ... represents almost double what they
produce," he added.

ADVERTISEMENT

Last year, Pan American and Chubut renegotiated the
company's concession for the site where the new reserve was
found, giving the firm another 10-year contract on condition
that it invest in exploration.

Das Neves said the company invested $700 million last year
and described the find as "the most significant reserve that's
been discovered in recent years."

The discovery of new reserves is good news for the
Argentine government amid energy shortages in Latin America's
No. 3 economy.

Economic expansion at a rate of more than 8 percent for
each of the past five years has strained energy resources after
years of low investment to raise output and explore for new
reserves.

During the Southern Hemisphere winter, the shortages forced
the government to restrict supplies to industrial users.